Supply Chain Xchange | Survey: Retailers Should Warn Consumers About Tariff Price Hikes
In an effort to defray the costs of new White House tariff import taxes, 83% of executives plan to raise prices on goods, even though a survey from First Insight shows 68% of brand and retail executives expect a negative reaction from customers, and 73% of consumers confirm they would be frustrated by those price increases.
The data comes from a recent survey of some 3,000 global consumers and 300 retail executives done by Pittsburgh-based First Insight, a company which says it uses AI to transform consumer feedback into profitable retail strategies.
The effects of retailers’ pricing decisions could shift market share in some cases, since nearly 80% of consumers said would feel more loyal to brands that absorb tariff-related increases, while nearly 3 in 4 would abandon their favorite brand for a cheaper generic if retail prices rise.
To stave off that impact, 77% of surveyed executives say they have preemptively communicated price increases directly with customers, according to the “Tariffs & Trust: Why Retailers Risk Loyalty with Price Hikes” study. First Insight found that retailers that increase prices can win consumers’ loyalty in other ways. Consumers said that the top two actions retailers and brands can take to offset the changes are: 1) clear communication–especially around why prices are rising. And 2) introduce new efforts to soften the blow, including offering loyalty points or discounts.
“We can hear shoppers’ voices loud and clear, and now is the time for retail executives to put what they’re saying to work,” Greg Petro, CEO of First Insight, said in a release. “While most retailers won’t be able to avoid raising prices altogether, unilateral price increases are a surefire way to lose customer confidence and trust. There are more informed ways of approaching pricing strategies and offsetting the burden on customers. Customers are forthcoming about what they’ll spend, what they’ll buy and where they’ll tap out–retailers simply need to engage them and communicate what they’re up to every step of the way.”
In additional findings, the survey found that:
- Retailers and brands expect price changes before Labor Day. Nearly 3 in 4 (73%) of retail executives said that they believe price increases will go into effect by the end of summer.
- Holiday shopping is going to be different this year, according to 92% of executives. Almost every executive foresees holiday shopping shifts, with only 8% saying they aren’t expecting noticeable changes. Of those who expect challenges, their top 3 concerns are: Reduced consumer spending (56%), shipping/logistics issues (53%), and product shortages (40%).
- Consumers will be focusing on value this holiday season. Consumers expect that tariffs will influence how they shop this holiday season in three primary ways: They’ll use more coupons and promotions (50%), spend less overall (49%), and buy items based on price versus brand (44%).
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